AICPA Code of Professional Conduct – Qs And As
The independence of a member in public practice or a covered member
may be impaired with respect to a client Correct Ans - If cannot
control the actions or relationships of someone else (client), independence
may be impaired
The "Breach of an Independence Interpretation" of the "Independence
Rule" Correct Ans - contains guidance for a member if identify a
breach of an independence interpretation of the code.
If see a breach, the member should evaluate the significance of the breach
and effect on the member's ability to comply with the rules of the code.
The member should take immediate action, to satisfactorily address the
consequences of the breach. The member should determine whether to
report the breach, for example, to those affected, a professional body,
relevant regulator, or oversight authority.
In making the evaluation and in determining what actions should be taken,
the member should exercise professional judgment and take into account
whether a reasonable and informed third party, thinking about the
significance and the action to be taken, and all the specific facts and
circumstances available to the member at that time, would be likely to
conclude that the member is able to comply with the rules of the code.
Just b/c member believes addressed doesn't mean that it's over/prevents
an investigation or enforcement action concerning the underlying breach of
the code and the member should be prepared to justify such determination.
Attest engagement team Correct Ans - Those individuals
participating in the attest engagement, including those who
perform concurring and engagement quality reviews.
The attest engagement team includes all employees and contractors
retained by the firm who participate in the attest engagement, regardless of
their functional classification (for example, audit, tax, or management
consulting services). The attest engagement team
,excludes specialists and individuals who perform only routine clerical
functions, such as word
processing and photocopying.
Close Relative Correct Ans - A parent, sibling, or nondependent
child
All Covered Members Correct Ans - 1. An individual on the attest
engagement team
2. An individual in a position to influence the attest engagement
3. A partner/partner equivalent/manager who provides more than 10
hours of nonattest service to the attest client within any fiscal year
4. A partner/partner equivalent in the office in which the lead attest
engagement partner or partner equivalent primarily practices in
connection with the attest engagement
Direct financial interest Correct Ans - A financial interest that is
a. owned directly by an individual or entity, including those managed on a
discretionary basis by others.
b. under the control of an individual or entity, including those managed on
a discretionary basis by others.
c. beneficially owned through an investment vehicle, estate, trust, or other
intermediary when the beneficiary
i. controls the intermediary or
ii. has the authority to supervise or participate in the intermediary's
investment decisions.
Financial interest Correct Ans - An ownership interest in an equity
or a debt security issued by an entity, including
rights and obligations to acquire such an interest and derivatives directly
related to such interest
Financial statement attest client Correct Ans - An entity whose
financial statements are audited, reviewed, or compiled when the
member's compilation report does not disclose a lack of independence.
Immediate family Correct Ans - A spouse, spousal equivalent, or
dependent (regardless of whether the dependent is
, related)
Independence. Consists of two elements, defined as follows: Correct
Ans - 1. Independence of mind is the state of mind that permits a
member to perform an attest service without being affected by influences
that compromise professional judgment, thereby allowing an individual to
act with integrity and exercise objectivity and professional skepticism.
2. Independence in appearance is the avoidance of circumstances that
would cause a reasonable and informed third party who has knowledge of
all relevant information, including the safeguards
applied, to reasonably conclude that the integrity, objectivity, or
professional skepticism of a firm
or member of the attest engagement team is compromised.
Indirect financial interest Correct Ans - A financial interest
beneficially owned through an investment vehicle, an estate, a trust, or an
other intermediary when the beneficiary neither controls the intermediary
nor has the authority to supervise or participate in the intermediary's
investment decisions.
Individual in a position to influence the attest engagement Correct Ans
- One who
1. evaluates the performance or recommends the compensation of the
attest engagement partner;
2. directly supervises or manages the attest engagement partner
3. consults with the attest engagement team regarding technical or
industry-related issues specific to
the attest engagement; or
4. participates in or oversees, at all successively senior levels, quality
control activities, including
internal monitoring, with respect to the specific attest engagement.
Key position. A position in which an individual has Correct Ans - 1.
primary responsibility for significant accounting functions that support
material components of the
financial statements;
2. primary responsibility for the preparation of the financial statements; or
The independence of a member in public practice or a covered member
may be impaired with respect to a client Correct Ans - If cannot
control the actions or relationships of someone else (client), independence
may be impaired
The "Breach of an Independence Interpretation" of the "Independence
Rule" Correct Ans - contains guidance for a member if identify a
breach of an independence interpretation of the code.
If see a breach, the member should evaluate the significance of the breach
and effect on the member's ability to comply with the rules of the code.
The member should take immediate action, to satisfactorily address the
consequences of the breach. The member should determine whether to
report the breach, for example, to those affected, a professional body,
relevant regulator, or oversight authority.
In making the evaluation and in determining what actions should be taken,
the member should exercise professional judgment and take into account
whether a reasonable and informed third party, thinking about the
significance and the action to be taken, and all the specific facts and
circumstances available to the member at that time, would be likely to
conclude that the member is able to comply with the rules of the code.
Just b/c member believes addressed doesn't mean that it's over/prevents
an investigation or enforcement action concerning the underlying breach of
the code and the member should be prepared to justify such determination.
Attest engagement team Correct Ans - Those individuals
participating in the attest engagement, including those who
perform concurring and engagement quality reviews.
The attest engagement team includes all employees and contractors
retained by the firm who participate in the attest engagement, regardless of
their functional classification (for example, audit, tax, or management
consulting services). The attest engagement team
,excludes specialists and individuals who perform only routine clerical
functions, such as word
processing and photocopying.
Close Relative Correct Ans - A parent, sibling, or nondependent
child
All Covered Members Correct Ans - 1. An individual on the attest
engagement team
2. An individual in a position to influence the attest engagement
3. A partner/partner equivalent/manager who provides more than 10
hours of nonattest service to the attest client within any fiscal year
4. A partner/partner equivalent in the office in which the lead attest
engagement partner or partner equivalent primarily practices in
connection with the attest engagement
Direct financial interest Correct Ans - A financial interest that is
a. owned directly by an individual or entity, including those managed on a
discretionary basis by others.
b. under the control of an individual or entity, including those managed on
a discretionary basis by others.
c. beneficially owned through an investment vehicle, estate, trust, or other
intermediary when the beneficiary
i. controls the intermediary or
ii. has the authority to supervise or participate in the intermediary's
investment decisions.
Financial interest Correct Ans - An ownership interest in an equity
or a debt security issued by an entity, including
rights and obligations to acquire such an interest and derivatives directly
related to such interest
Financial statement attest client Correct Ans - An entity whose
financial statements are audited, reviewed, or compiled when the
member's compilation report does not disclose a lack of independence.
Immediate family Correct Ans - A spouse, spousal equivalent, or
dependent (regardless of whether the dependent is
, related)
Independence. Consists of two elements, defined as follows: Correct
Ans - 1. Independence of mind is the state of mind that permits a
member to perform an attest service without being affected by influences
that compromise professional judgment, thereby allowing an individual to
act with integrity and exercise objectivity and professional skepticism.
2. Independence in appearance is the avoidance of circumstances that
would cause a reasonable and informed third party who has knowledge of
all relevant information, including the safeguards
applied, to reasonably conclude that the integrity, objectivity, or
professional skepticism of a firm
or member of the attest engagement team is compromised.
Indirect financial interest Correct Ans - A financial interest
beneficially owned through an investment vehicle, an estate, a trust, or an
other intermediary when the beneficiary neither controls the intermediary
nor has the authority to supervise or participate in the intermediary's
investment decisions.
Individual in a position to influence the attest engagement Correct Ans
- One who
1. evaluates the performance or recommends the compensation of the
attest engagement partner;
2. directly supervises or manages the attest engagement partner
3. consults with the attest engagement team regarding technical or
industry-related issues specific to
the attest engagement; or
4. participates in or oversees, at all successively senior levels, quality
control activities, including
internal monitoring, with respect to the specific attest engagement.
Key position. A position in which an individual has Correct Ans - 1.
primary responsibility for significant accounting functions that support
material components of the
financial statements;
2. primary responsibility for the preparation of the financial statements; or
